Case 4:20-cv-00607-O Document 8 Filed 07/20/20 Page 1 of 8 PageID 104

IN THE UNITED STATES DISTRICT FOR THE NORTHERN DISTRICT OF TEXAS FORT WORTH DIVISION

HIBBETT SPORTING GOODS, INC. § § Plaintiff, § § v. § CIVIL ACTION NO. 4:20-CV-00607-O § WEATHERFORD DUNHILL LLC § C/O DUNHILL PROPERTY § MANAGEMENT SERVICES, INC. § § Defendant. §

DEFENDANT WEATHERFORD DUNHILL LLC C/O DUNHILL PROPERTY MANAGEMENT SERVICES, INC.’S TO DISMISS AND BRIEF IN SUPPORT

Incorrectly identified Defendant, Weatherford Dunhill LLC c/o Dunhill Property

Management Services, Inc. (“Dunhill”),1 respectfully moves the court to dismiss the Plaintiff’s

Original for Declaratory Judgment (“Complaint”) against it pursuant to Federal Rule

of Civil Procedure 12(b)(1) for lack of subject matter , and its discretionary powers

under the Declaratory Judgement Act, 28 U.S.C. § 2201(a) (“the Act”), and in support thereof, respectfully shows the court as follows:

I. INTRODUCTION

The Court should dismiss this action for declaratory relief pursuant to Federal Rule of Civil

Procedure 12(b)(1) and its discretionary powers under the Act because plaintiff Hibbett Sporting

Goods, Inc.’s (“Hibbett”) pre-emptive, anticipatory claim for declaratory relief amounts to an

impermissible race to the courthouse in anticipation of litigation, and its claim that this court has

fails because the is less than $75,000.00. Hibbett was

1 The correctly named party should be Weatherford Dunhill, LLC. There is no entity named “Weatherford Dunhill, LLC c/o Dunhill Property Management Services, Inc.”

DEFENDANT WEATHERFORD DUNHILL LLC C/O DUNHILL PROPERTY PAGE 1 OF 8 MANAGEMENT SERVICES, INC.’S MOTION TO DISMISS Case 4:20-cv-00607-O Document 8 Filed 07/20/20 Page 2 of 8 PageID 105

well aware of an impending action to terminate its lease agreement with Dunhill and retake

possession of the leased premises due to its own default under the plain language of the lease. In a

blatant attempt to deprive Dunhill of the opportunity to bring suit in the forum of its choice, Hibbett

launched this declaratory attack to improperly position itself as the plaintiff in federal court.

Pre-emptive suits and as employed in this case by Hibbett are highly

disfavored and it is well within this Court’s discretion to dismiss the anticipatory declarative

action. This Court should exercise its discretion and dismiss this suit so that the natural plaintiff,

Dunhill, can bring its claims against Hibbett to terminate the lease and re-take possession of the leased premises, arising out of Hibbett’s failure to comply with the terms of the lease, in state court. Because of the glaringly obvious attempt at forum shopping though its anticipatory declaratory judgment action, and the fact that the $75,000.00 minimum requirement for diversity citizenship jurisdiction is not met, this court should dismiss this case, pursuant to Rule 12(b)(1)

and the Declaratory Judgment Act.

II. FACTUAL BACKGROUND

In November 2009, Dunhill and Hibbett entered into a lease agreement (the “Lease”).

Under the terms of the Lease, Hibbett leased approximately 6,068 gross leasable square feet to operate a sporting goods store. The Lease includes a Main Term of five (5) years and two (2)

option terms of five (5) years each. Under the terms of the Lease, Hibbett is required to pay

installments of Minimum Rent on the first day of each calendar month.

Hibbett failed to pay rent for the months of April and May 2020. On April 30, 2020 Dunhill

issued written “Notice of Unpaid Rent” to Hibbett for its failure to pay April rent. Under the lease,

Hibbett had ten (10) days after receipt of the notice to cure its failure to timely pay rent. Hibbett failed to make any payment within the ten (10) day cure period. After receiving the April 30, 2020

DEFENDANT WEATHERFORD DUNHILL LLC C/O DUNHILL PROPERTY PAGE 2 OF 8 MANAGEMENT SERVICES, INC.’S MOTION TO DISMISS Case 4:20-cv-00607-O Document 8 Filed 07/20/20 Page 3 of 8 PageID 106

“Notice of Unpaid Rent,” Hibbett’s general counsel sent correspondence to Dunhill stating that it

would not pay rent as due and instead invoke a co-tenancy provision of the Lease.

Section 25 of the Lease provides that failure to pay rent past the cure period constitutes an

event of default, allowing Dunhill to terminate the Lease without notice. Hibbett then, long past

the cure period, attempted to pay past due rent. Dunhill responded on June 2, 2020, informing

Hibbett of Dunhill’s rejection of past due rent payment and provided notice of Dunhill’s intent to

terminate the Lease. Pursuant to its rights under the Lease, Dunhill notified Hibbett that it would

seek to retake possession of the Premises and recover its damages. This notice was not required

by the terms of the Lease but was given as a courtesy to Hibbett. After being notified of the

impending action to terminate the Lease, retake possession of the premises, and recover damages,

Hibbett filed this in an attempt to position itself as the plaintiff in federal court.

III. LEGAL STANDARDS

a. Rule 12(b)(1) – Lack of Subject Matter Jurisdiction

The limited jurisdiction of federal over civil generally only extends to two

types of cases: (1) cases involving claims under federal law; and (2) cases involving claims under

state law when the plaintiff is the citizen of a different state from every defendant and the amount

in controversy exceeds $75,000.00. See 28 U.S.C. §§ 1331, 1332. In this case, Hibbett’s only claim

for federal jurisdiction is based on diversity of citizenship. Subject matter based on diversity of

citizenship requires complete diversity, and that the “matter in controversy exceeds the sum or

value of $75,000.00, exclusive of interest and costs.” 28 U.S.C. § 1332. “In actions seeking

declaratory or injunctive relief, it is well established that the amount in controversy is measured

by the value of the object of the litigation.” Farkas v. GMAC Mortg., L.L.C., 737 F.3d 338, 341

(5th Cir. 2013).

DEFENDANT WEATHERFORD DUNHILL LLC C/O DUNHILL PROPERTY PAGE 3 OF 8 MANAGEMENT SERVICES, INC.’S MOTION TO DISMISS Case 4:20-cv-00607-O Document 8 Filed 07/20/20 Page 4 of 8 PageID 107

b. Declaratory Judgment Act (28 U.S.C. § 2201)

The Declaratory Judgment Act does not grant litigants an absolute right to declaratory

relief, rather it enables the and places within its sound discretion the ability to decide

whether or not to entertain a declaratory action. See Sherwin-Williams Co. v. Holmes County, 343

F.3d 383, 387 (5th Cir. 2003). “By the Declaratory Judgment Act, Congress sought to place a

remedial arrow in the district court’s quiver; it created an opportunity, rather than a duty, to grant

a new form of relief to qualifying litigants.” Wilton v. Seven Falls Company, 515 U.S. 277, 287-

88 (1995). Before deciding whether to hear a declaratory judgment suit, a district court must first

determine: “(1) whether the declaratory action is justiciable; (2) whether the court has the authority

to grant declaratory relief; and (3) whether to exercise its discretion to decide or dismiss the

action.” Sherwin-Williams Co., 343 F.3d at 387. The action is justiciable if there is an actual

controversy among the parties. Id. An actual controversy exists where there is a substantial

controversy of sufficient immediacy and reality between parties having adverse legal interests.

Orix Credit Alliance, Inc. v. Wolfe, 212 F.3d 891, 896 (5th Cir. 2000). The court has authority to

grant declaratory relief if it has jurisdiction and there is no pending state court action between the

parties that would violate the Anti-Injunction Act. Sherwin-Williams Co., 343 F.3d at 387. If those

two requirements are met, the court then has to decide whether to exercise its discretion to dismiss

the case. See id.

A district court has broad discretion to dismiss a declaratory judgement action brought

under the Declaratory Judgment Act when it is brought for improper reasons. See 28 U.S.C. §

2201; Mission Ins. Co. v. Puritan Fashions Corp., 706 F.2d 599, 601-03 (5th Cir. 1983). The Fifth

Circuit has identified seven nonexclusive factors for a district court to consider when deciding whether to exercise its discretion to dismiss a declaratory judgment action: (1) whether there is a

DEFENDANT WEATHERFORD DUNHILL LLC C/O DUNHILL PROPERTY PAGE 4 OF 8 MANAGEMENT SERVICES, INC.’S MOTION TO DISMISS Case 4:20-cv-00607-O Document 8 Filed 07/20/20 Page 5 of 8 PageID 108

pending state action in which all of the matters in controversy may be fully litigated; (2) whether the plaintiff filed suit in anticipation of a lawsuit filed by the defendant; (3) whether the plaintiff

engaged in forum shopping in bringing the suit; (4) whether possible inequities in allowing the

declaratory plaintiff to gain precedence in time or to change forums exist; (5) whether the federal

court is a convenient forum for the parties and witnesses; (6) whether retaining the lawsuit in

federal court would serve the purposes of judicial economy; and (7) whether the federal court is

being called on to construe a state judicial decree involving the same parties and entered by the

court before whom the parallel state suit between the same parties is pending. St. Paul Insurance

Co. v. Trejo, 39 F.3d 585, 590-91 (5th Cir. 1994).

IV. ARGUMENTS

a. Lack of Subject Matter Jurisdiction

This court should dismiss Plaintiff’s action pursuant to Rule 12(b)(1) because the amount

in controversy is less than $75,000.00 and there is no federal question jurisdiction. The Plaintiff’s

complaint correctly acknowledges that the issue in this case centers around two months of unpaid

rent. Under the Lease, the monthly rent due in years 11-15 of the Option Term is $8,596.33. Thus

the value of the two months’ rent, the object of this litigation, is $17,192.66, far less than the

required $75,000.00 threshold for diversity jurisdiction in federal court. See 28 U.S.C. § 1332.

“The party seeking to invoke federal diversity jurisdiction bears the burden of establishing

both that the parties are diverse and that the amount in controversy exceeds $75,000.00.” Garcia

v. Koch Oil Co. of Tex. Inc., 351 F.3d 636, 638 (5th Cir. 2003). In this case Plaintiff did no more

than declare, without any further support, that more than $75,000.00 is in controversy in this case.

The amount in controversy here is less than $75,000.00 and diversity of citizenship is the only

DEFENDANT WEATHERFORD DUNHILL LLC C/O DUNHILL PROPERTY PAGE 5 OF 8 MANAGEMENT SERVICES, INC.’S MOTION TO DISMISS Case 4:20-cv-00607-O Document 8 Filed 07/20/20 Page 6 of 8 PageID 109

basis for federal jurisdiction; therefore, the Court should dismiss this action pursuant to Rule

12(b)(1) for lack of subject matter jurisdiction. See Fed. R. Civ. Proc. 12(b)(1).

b. Plaintiff Filed Suit in Anticipation of Litigation

Even if this Court determines it has subject matter jurisdiction in this case, it should

exercise its discretion and dismiss this premature action because it was filed in anticipation of

inevitable state court litigation by Dunhill. Declaratory suits filed in anticipation of litigation have

the potential to deprive the plaintiff of his choice of forum. 909 Corp. v. Village of Bolingbrook

Police Pension Fund, 741 F. Supp. 1290, 1293 (S.D. Tex. 1990). There is a “general policy that a

party whose rights are being infringed should have the privilege of electing where to enforce those

rights.” Texas Instruments, Inc. v. Micron Semiconductor, Inc., 815 F. Supp. 994, 997 (E.D. Tex.

1993). When the infringer, in this case the Plaintiff, races to file a declaratory action he attempts

to take that privilege away. See id. This subverts and distorts the purpose of the Declaratory

Judgment Act, which is to promote efficiency and not to provide a method for a potential defendant

to race to res judicata or the forum of its choice. See Dresser Industries, Inc. v. Insurance Co. of

North America, 358 F. Supp. 327, 330 (N.D. Tex. 1973). Courts consider whether the plaintiff in

a declaratory action had reason to expect the defendant to file a lawsuit when determining whether

the action was brought in anticipation of litigation. See, e.g., Mill Creek Press, Inc. v. The Kinkade

Co., No. CIVA.3:04-CV-1213-G, 2004 WL 2607987, at *7-8 (N.D. Tex. Nov. 16, 2004).

Here, Plaintiff Hibbett was well aware of an impending action to terminate the Lease and

retake possession of the premises and recover damages caused by its default. First, Dunhill wrote

the Plaintiff after it failed to pay rent due under the Lease, informing it that failure to pay is

considered an event of default. After Plaintiff took no action to pay rent within the prescribed

curative period, Dunhill notified the Plaintiff that it had defaulted by refusing to pay rent and that

DEFENDANT WEATHERFORD DUNHILL LLC C/O DUNHILL PROPERTY PAGE 6 OF 8 MANAGEMENT SERVICES, INC.’S MOTION TO DISMISS Case 4:20-cv-00607-O Document 8 Filed 07/20/20 Page 7 of 8 PageID 110

the Lease would be terminated, the premises retaken, and damages sought. Given the language in

the notices and the language in the Lease, the Plaintiff knew that in order to retake the leased

premises Dunhill would have to file suit in state court, in a forcible entry and detainer action. The

right to terminate the lease and retake the premises from its tenant who refuses to pay rent was

infringed, thus it is Dunhill’s privilege to choose the forum in which to enforce that right. See

Texas Instruments, 815 F. Supp. at 997. This action was brought in anticipation of litigation to

deprive Dunhill of its rights and privileges, thus the court should dismiss the action.

V. CONCLUSION

Because the amount in controversy in this case is less than $75,000.00 and the only basis

for federal subject matter jurisdiction alleged by the plaintiff is diversity of citizenship, the Court

should dismiss this action pursuant to Rule 12(b)(1) for lack of subject matter jurisdiction. Even if

this Court determines that it has jurisdiction, it should exercise its discretionary power under the

Declaratory Judgement Act and dismiss the action because it was filed in anticipation of litigation by the defendant.

Respectfully Submitted,

/s/ Levi G. McCathern, II__ Levi G. McCathern, II Texas State Bar No. 00787990 [email protected] Brett Chisum Texas State Bar No. 24082816 [email protected] McCathern, PLLC Regency Plaza 3710 Rawlins, Suite 1600 Dallas, Texas 75219 Telephone: 214-741-2662 Facsimile: 214-741-4717 ATTORNEYS FOR DEFENDANT

DEFENDANT WEATHERFORD DUNHILL LLC C/O DUNHILL PROPERTY PAGE 7 OF 8 MANAGEMENT SERVICES, INC.’S MOTION TO DISMISS Case 4:20-cv-00607-O Document 8 Filed 07/20/20 Page 8 of 8 PageID 111

CERTIFICATE OF SERVICE

This is to certify that on July 20, 2020, a true and correct copy of the foregoing has been furnished to all parties of record via the Court’s electronic filing service in accordance with the Federal Rules of Civil Procedure.

William S. Snyder Texas State Bar No. 00786250 [email protected] Bethanie Livernois Texas State Bar No. 24093787 [email protected] 4400 Renaissance Tower 1201 Elm Street Dallas, Texas 75270 (214) 939-8700 (Telephone) (214) 939-8787 (Facsimile) BRADLEY ARANT BOULT CUMMINGS LLP ATTORNEYS FOR PLAINTIFF

_/s/ Brett M. Chisum______Brett M. Chisum

DEFENDANT WEATHERFORD DUNHILL LLC C/O DUNHILL PROPERTY PAGE 8 OF 8 MANAGEMENT SERVICES, INC.’S MOTION TO DISMISS